Blended families and second relationships are becoming increasingly common in New Zealand; however, the default provisions of the Property Relationships Act 1976 may not fairly protect people entering a second relationship.

When partners from previous relationships come together, especially with children in the mix, thoughtful planning is needed to ensure that everyone's needs are met and potential conflicts are identified and addressed. This can prevent a significant amount of stress and costs. 

Here are some key things to consider if you’re in a second relationship:

You need to consider what happens in the unfortunate event of a partner's death or permanent incapacity. Who retains ownership of the house, on what terms, who is the property left to, what happens with the residue of the estate and so forth. If someone becomes permanently incapacitated, who looks after them? What happens to the terms of any existing agreement if a partner becomes a carer for the incapacitated person? All these things need to be carefully considered to avoid any problems down the track. Consider whether any insurance policies are in place to assist during this time, and clarify who will be responsible for paying premiums and what coverage is available.

Revise your Wills, Enduring Powers of Attorney and Contracting Out Agreement. This will cover both partners in the event of death, disability and divorce. It's essential to have it documented that specifies how assets will be divided between biological and stepchildren. This approach reduces the likelihood of conflict and ensures that the deceased's wishes are respected.

In the event of one partner’s death, the surviving partner may have the right to live in the family home. However, this right can lead to complications if there is no valid will or Contracting Out Agreement in place, particularly if the surviving partner's children demand their inheritance.

To avoid disputes, you may want to consider the right to occupy the family home in your will, detailing the terms and duration of this right. This clarity can help protect both partners and their children.

Discuss asset ownership and contributions to shared costs openly. A prenuptial or contracting out agreement can outline each partner's rights and obligations, and identify what is relationship property and separate property.

Life insurance can be a vital tool for safeguarding the interests of both partners and their children in blended families. Policies can be structured to ensure that children from previous relationships receive their intended inheritance or to provide financial support for the surviving partner. It’s important to clarify who will be responsible for paying insurance premiums (and continuing to pay them!) to avoid any confusion later on.

To prevent family conflicts and ensure that everyone’s needs are addressed, feel free to book a FREE 30-minute consultation here with one of our team, who can discuss how best to structure your situation.